Box IPO Financial Model

8/10/2019 Box IPO Financial Model

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Box IPOPrepared by - Dheeraj Vaidya, CFA, FRMemail - [email protected]

websites: www.wallstreetmojo.com www.educorporatebridge.com

Assumptions

Important Assumptions

Core Financial Statements

Quarterly IS

Income Statement

Balance Sheet

Cash Flows

Supporting Financial Modeling Schedules

DebtWorking Capital

Depreciation Schedule

Amortization Schedule

Shareholder's Equity

Shares Oustanding

Valuations

DCF Valuation

Relative Valuation

Option Value
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Box IPOAssumptions

Financial Model Assumptions Dec-11 Jan-13 Jan-14 Jan-15

Sales Growth (% yoy) 111% 100%

COGS as % of Sales -24% -21% -20%R&D as % of Sales -49% -37% -30%

Sales and Marketing as % of Sales -169% -138% -120%General & Admin as % of Sales -43% -32% -30%Capital Expenditure as % of Sales 33% 20% 5%

Minimum Cash Balance? 100000


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Jan-16 Jan-17 Jan-18 Jan-19

90% 85% 80% 75%

-20% -20% -20% -20%-25% -20% -15% -10%

-110% -100% -90% -80%-28% -26% -24% -22%

5% 5% 5% 5%


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Box IPOQuarterly Income Statement

Apr. 30,2012

($ in Million Except Per Share Amounts) 2012

Revenue 10,013

Cost of revenue (2,355)

Gross profit 7,658

Operating expenses:

Research and development (5,994)

Sales and marketing (17,971)

General and administrative (3,910)

Total operating expenses (27,875)

Loss from operations (EBIT) (20,217)

Remeasurement of redeemable convertible preferred stock warrant liability -

Interest income (expense), net (222)

Other income (expense), net 9

Loss before provision (benefit) for income taxes (20,430)

Provision (benefit) for income taxes 3

Net loss (20,433)

A ti f d bl tibl f d t k


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Research and development -5,994

% sales -59.9%Sales and marketing -17,971

% sales -179.5%General and administrative -3,910% sales -39.0%

Total operating expenses -30,230

% sales -301.9%

Loss from operations -20,217

-201.9%

Effective Tax Rates

EBITDA


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-6,663 -7,993 -8,346 -9,439 -10,965 -12,090

-51.4% -49.4% -42.4% -40.3% -38.7% -36.0%-22,363 -27,934 -30,953 -33,936 -41,416 -48,822

-172.6% -172.8% -157.4% -144.9% -146.0% -145.4%-5,385 -8,447 -7,687 -8,261 -10,010 -11,386-41.6% -52.3% -39.1% -35.3% -35.3% -33.9%

-37,575 -48,858 -51,263 -56,197 -68,298 -79,470

-290.0% -302.3% -260.7% -240.0% -240.8% -236.6%

-24,617 -32,694 -31,601 -32,783 -39,934 -45,885

-190.0% -202.3% -160.7% -140.0% -140.8% -136.6%

0.0% 6.1% -0.1%


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Jan. 31,2014

2014

38,829

(8,334)

30,495

(13,473)

(47,014)

(10,186)

(70,673)

(40,178)

(2,594)

(462)

(55)

(43,289)

83

(43,372)


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-13,473

-34.7%-47,014

-121.1%-10,186-26.2%

-79,007

-203.5%

-40,178

-103.5%

-0.2%


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Box IPOAnnual Income Statement

($ in Million Except Per Share Amounts) Dec-11 Jan-13 Jan-14

Revenue 21,084 58,797 124,192Cost of revenue (6,873) (14,280) (25,974)

Gross profit 14,211 44,517 98,218

Operating expenses:

Research and development (14,396) (28,996) (45,967)

Sales and marketing (36,189) (99,221) (171,188)

General and administrative (13,480) (25,429) (39,843)

Total operating expenses (64,065) (153,646) (256,998)

Per Month Operating Expense (5,339) (12,804) (21,417)Per Month Operating Expense (ex R&D) (4,139) (10,388) (17,586)

Loss from operations (EBIT) (49,854) (109,129) (158,780)

Remeasurement of redeemable convertible preferr (356) (1,727) (8,477)

Interest income (expense), net (109) (1,764) (3,705)

Other income (expense), net 49 116 (26)

Loss before provision (benefit) for income taxes (50,270) (112,504) (170,988)

Historicals


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% sales -171.6% -168.8% -137.8%

General and administrative (13,480) (25,429) (39,843)% sales -63.9% -43.2% -32.1%

Total operating expenses (70,938) (167,926) (282,972)

% sales -336.5% -285.6% -227.9%

Loss from operations (49,854) (109,129) (158,780)

% sales -236.5% -185.6% -127.9%

Effective Tax Rates 1.4%

Billing and Deferred Revenues

Revenue 21,084 58,797 124,192Deferred Revenue, end of period 12,921 40,099 90,072

Less: deferred revenue, Beginning of period (3,614) (13,169) (40,099)

Billings 30,391 85,727 174,165

Billing Growth 177.0% 182.1% 103.2%

Deferred Revenue as % of Billing 43% 47% 52%


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Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

248,384 471,930 873,070 1,571,526 2,750,170(49,677) (94,386) (174,614) (314,305) (550,034)

198,707 377,544 698,456 1,257,220 2,200,136

(74,515) (117,982) (174,614) (235,729) (275,017)

(298,061) (519,123) (873,070) (1,414,373) (2,200,136)

(74,515) (132,140) (226,998) (377,166) (605,037)

(447,091) (769,245) (1,274,682) (2,027,268) (3,080,190)

(37,258) (64,104) (106,223) (168,939) (256,683)(31,048) (54,272) (91,672) (149,295) (233,764)

(248,384) (391,702) (576,226) (770,048) (880,054)

(1,986) 1,352 10,766 23,512 35,448

(250,370) (390,350) (565,460) (746,535) (844,606)

Forecasts


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-120.0% -110.0% -100.0% -90.0% -80.0%

(74,515) (132,140) (226,998) (377,166) (605,037)-30.0% -28.0% -26.0% -24.0% -22.0%

(496,768) (863,631) (1,449,296) (2,341,573) (3,630,224)

-200.0% -183.0% -166.0% -149.0% -132.0%

(248,384) (391,702) (576,226) (770,048) (880,054)

-100.0% -83.0% -66.0% -49.0% -32.0%

30.0% 30.0% 30.0% 30.0% 30.0%

248,384 471,930 873,070 1,571,526 2,750,170193,492 340,312 651,148 1,124,906 1,986,434

(90,072) (193,492) (340,312) (651,148) (1,124,906)

351,804 618,749 1,183,906 2,045,283 3,611,698

102.0% 75.9% 91.3% 72.8% 76.6%

55% 55% 55% 55% 55%


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Box IPOAnnual Balance Sheet

Jan-13

ASSETS

Current assets:

Cash and cash equivalents 127,625

Accounts receivable 17,218

Prepaid expenses and other current assets 8,177Deferred commissions 8,959

Total current assets 161,979

Property and equipment, net 29,949

Intangible assets, net 830

Goodwill 0

Other long-term assets 3,034

Total assets 195,792

LIABILITIES

Current liabilities:

Accounts payable 11,906

Accrued compensation and benefits 3,899

Accrued expenses and other current liabilities 1,628

Deferred revenue 38,275

Deferred rent 504


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Total stockholders (deficit) equity -183,656

Total liabilities + Shareholder's Equity 195,792

Check -


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Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

108,851 206,118 100,000 100,000 100,000 100,000

42,669 85,063 161,620 298,996 538,194 941,839

7,776 14,903 28,316 52,384 94,292 165,0107,152 13,661 25,956 48,019 86,434 151,259

166,448 319,746 315,892 499,400 818,919 1,358,108

41,385 26,823 15,770 10,585 14,786 77,918

6,567 6,268 5,940 9,387 17,090 30,687

8,081 8,081 8,081 8,081 8,081 8,081

12,948 12,948 12,948 12,948 12,948 12,948

235,429 373,866 358,631 540,401 871,824 1,487,743

12,405 24,498 46,546 86,111 155,000 271,250

16,098 29,806 56,632 104,768 188,583 330,020

14,161 12,419 23,596 43,653 78,576 137,50878,282 193,492 340,312 651,148 1,124,906 1,986,434

1,213 2,235 4,247 7,858 14,144 24,752


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62,051 61,681 -328,669 -894,129 -1,640,664 -2,485,270

235,429 373,866 358,631 540,401 871,824 1,487,743

- - - - - -


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Box IPOAnnual Cash Flows

Dec-11 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss (50,271) (112,563) (168,557) (250,370) (390,350) (565,460)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 2,838 8,616 17,867 29,764 37,337 49,757

Stock-based compensation expense 6,222 7,536 11,749

Amortization of deferred commissions 1,688 7,028 13,500

Remeasurement of redeemable convertible preferred 356 1,727 8,477

Release of deferred tax valuation allowance (2,590)

Other 214 628 212

Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable (4,102) (11,499) (25,157) (42,394) (76,557) (137,377)

Deferred commissions (3,108) (14,027) (13,999) (6,509) (12,295) (22,063)

Prepaid expenses and other assets (7,478) (2,028) (3,792) (7,127) (13,413) (24,068)

Accounts payable 3,546 2,046 (3,177) 12,093 22,048 39,565

Accrued expenses and other liabilities 3,048 2,100 24,055 11,966 38,003 68,194

Deferred rent 3,467 1,755 (330) 1,022 2,012 3,610

Deferred revenue 9,307 26,930 49,973 115,210 146,820 310,836

Net cash used in operating activities (34,273) (81,751) (91,769) (136,344) (246,395) (277,006)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of marketable securities (35,814) - -

Proceeds from maturity of marketable securities 12,000 20,000 -

Purchases of property and equipment (13,467) (19,499) (24,424) (12,419) (23,596) (43,653)

Investments in non-marketable equity securities - (125) -

Acquisition, net of cash acquired and purchases of inta (1,012) (62) (7,761) (2,484) (2,360) (4,365)

Net cash provided by (used in) investing activities (38,293) 314 (32,185) (14,903) (25,956) (48,019)

Cash Flow available for Financing Activities (81,437) (123,954) (151,247) (272,351) (325,025)


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Box IPODebt Schedule

Dec-11 Jan-13 Jan-14 Jan-15

Cash Flow Available for Financing Activities (151,246.6)

Proceeds from/ (Repurchase of) Equity 250,000.0

+ Beginning Cash Balance 108,851.0

- Minimum Cash Balance (100,000.0)

Cash Available for Debt Repayment 107,604.4

Long Term Debt IssuanceLong Term Debt (Repayments) (1,486.0)

Cash Available for Revolving Credit Facility 106,118.4

Additional Revolving Credit Facility

Beginning Balance -

Discretionary (Paydown)/ Borrowings -Ending Balance - -

Revolving Credit Facility (commited payments)

Beginning Balance 34,000.0Issuance

(Repayment/ Amortization) (1,486.0)Ending Balance 34,000.0 32,514.0

Interest Expense Calculation

1) Revolving Credit Facility -3 5%


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(272,350.8) (325,025.1) (410,289.4) (271,769.5)

- - - -

206,118.4 100,000.0 100,000.0 100,000.0

(100,000.0) (100,000.0) (100,000.0) (100,000.0)

(166,232.3) (325,025.1) (410,289.4) (271,769.5)

(16,257.0) (16,257.0) - -

(182,489.3) (341,282.1) (410,289.4) (271,769.5)

- 182,489.3 523,771.5 934,060.9

182,489.3 341,282.1 410,289.4 271,769.5182,489.3 523,771.5 934,060.9 1,205,830.4

32,514.0 16,257.0 - -

(16,257.0) (16,257.0) - -16,257.0 - - -

91,245 353,130 728,916 1,069,9463 5% 3 5% 3 5% 3 5%


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Box IPOWorking Capital

Dec-11 Jan-13 Jan-14

Net Sales 58,797 124,192

Cost of Sales 14,280 25,974

Working Capital Balances

Accounts receivable 17,218 42,669

Prepaid expenses and other current assets 8,177 7,776

Deferred commissions 8,959 7,152

Total Non Cash Current Assets 34,354 57,597

Accounts payable 11,906 12,405

Accrued compensation and benefits 3,899 16,098

Accrued expenses and other current liabilities 1,628 14,161Deferred revenue 38,275 78,282

Deferred rent 504 1,213

Total Non-Debt Current Liabilities 56,212 122,159

Net Working Capital/ (Deficit) (21,858) (64,562)

(Increase)/ Decrease in Working Capital 42,704

Purchases


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Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

248,384 471,930 873,070 1,571,526 2,750,170

49,677 94,386 174,614 314,305 550,034

85,063 161,620 298,996 538,194 941,839 Number of 365

14,903 28,316 52,384 94,292 165,010

13,661 25,956 48,019 86,434 151,259

113,627 215,892 399,400 718,919 1,258,108

24,498 46,546 86,111 155,000 271,250

29,806 56,632 104,768 188,583 330,020

12,419 23,596 43,653 78,576 137,508193,492 340,312 651,148 1,124,906 1,986,434

2,235 4,247 7,858 14,144 24,752

262,451 471,334 893,539 1,561,208 2,749,964

(148,824) (255,442) (494,139) (842,289) (1,491,856)

84,262 106,618 238,697 348,150 649,566


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193,492 340,312 651,148 1,124,906 1,986,434

2,235 4,247 7,858 14,144 24,752

4.5% 4.5% 4.5% 4.5% 4.5%


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Depreciation (Servers) 19,272.5

Computer hardware and softwareUseful Life 3

Computer hardware and software 5,792.0

Depreciation Expense (existing) 1,930.7

Year Capex Useful Life

2015 1,018.9 3.0 339.6

2016 1,935.9 3.0

2017 3,581.5 3.0

2018 6,446.6 3.0

Total Depreciation (Computer hardware and software) 2,270.3

Furniture and fixtures

Useful Life 3

Furniture and fixtures 4,388.0Depreciation Expense (existing) 1,462.7

Year Capex Useful Life

2015 771.9 3.0 257.3

2016 1,466.7 3.0

2017 2,713.3 3.0

2018 4,884.0 3.0

Total Depreciation (Furniture and fixtures) 1,720.0


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471,930 873,070 1,571,526 2,750,170

23,596 43,653 78,576 137,508

5.0% 5.0% 5.0% 5.0%

26,823.2 15,769.6 10,585.2 14,785.6

23,596.5 43,653.5 78,576.3 137,508.5

(34,650.1) (48,837.9) (74,375.9) (74,375.9)

15,769.6 10,585.2 14,785.6 77,918.2

Useful Life Proportion of Assets3 69.6%

3 8.2%

3 6.2% Straight Line Method of Depreciation

3 13.4% Straight Line Method of Depreciation

NA 2.5% Straight Line Method of Depreciation


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24,750.5 34,884.8 53,126.6 53,126.6

1,930.7 1,930.7 1,930.7 1,930.7

339.6 339.6 339.6 339.6

645.3 645.3 645.3 645.3

1,193.8 1,193.8 1,193.8

2,148.9 2,148.9

2,915.6 4,109.4 6,258.3 6,258.3

1,462.7 1,462.7 1,462.7 1,462.7

257.3 257.3 257.3 257.3

488.9 488.9 488.9 488.9

904.4 904.4 904.4

1,628.0 1,628.0

2,208.9 3,113.3 4,741.3 4,741.3


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Box IPOConsolidated Amortization & Intangible

Dec-11 Jan-13 Jan-14 Jan-15 Jan-16

Net Sales 58,797 124,192 248,384 471,930

Additions to Intangibles -62.0 -7761.0 2483.8 2359.6

Additions to Intangibles as % of Net Sales -0.1% -6.2% 1.0% 0.5%

Beginning Net Intangibles 6,567.0 6,267.8

Additions to Intangibles 2,483.8 2,359.6

(Amortization Expense) (2,783.0) (2,687.0)

(Intangible Sales and write offs)

Ending Net Intangibles 6,567.0 6,267.8 5,940.5


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61,681.3 (328,668.6) (894,128.7) (1,640,664.1)

(390,349.9) (565,460.1) (746,535.5) (844,606.2)

- - - -

(328,668.6) (894,128.7) (1,640,664.1) (2,485,270.3)


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Box IPO

Valuing Box Inc Options

Assumptions

Inputs for Black-Scholes Model

Enter the current stock price = 20

Enter the strike price on the option = 3.65

Enter the expiration of the option = 4.225

Enter the standard deviation in stock prices = 48.00%


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Box IPOShares Oustanding Schedule

Common Shares

Current Structure

Class A -

Class B 90,193,539

Class B 225,300 issuable upon vesting

Class B 41,840 future issuable

New Class B Shares Issed through IPO


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Weighted-Average Remaining

Contractual Life (Years)

Aggregate Intrinsic Value (in

thousands)

8.69 38,954

8.45 191,809

8.44 186,436

7.49 67,947


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Box IPODCF Valuations

Free Cash Flow Projections

($ in Million Except Per Share Amounts) Dec-11 Jan-13

EBIT (49,854) (109,129)

Free Cash Flow to Firm

EBIT x (1-t) (49,854) (109,129)Add: Depreciation & amortization 2,838 8,616

Less: Capex (14,479) (19,561)

Add: Change in working capital

FCFF (61,495) (120,074)

NOLs

Cost of Capital 15.0%

Infinite growth rate 5%

Dec-11 Jan-13

Cash Flows

NPV of explicit period (958,307)

Terminal value @ perpetual growth (2019) Dec-11 Jan-13

Historicals

Free cash flow to firm of explicit period (2015E to 2019E)


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(30.80)

10%

8%

6%

5%

3%

1%

grow

th


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(158,780) (248,384) (391,702) (576,226) (770,048) (880,054)

(156,523) (248,384) (391,702) (576,226) (770,048) (880,054)17,867 29,764 37,337 49,757 74,530 74,530

(32,185) (14,903) (25,956) (48,019) (86,434) (151,259)

42,704 84,262 106,618 238,697 348,150 649,566

(128,137) (149,261) (273,702) (335,791) (433,801) (307,218)

263,700 512,084 903,786 1,480,012 2,250,059 3,130,113


(149,261) (273,702) (335,791) (433,801) (307,218)


Forecasts


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12% 14% 15% 20% 25%

(30.8) (30.8) (30.8) (30.8) (30.8)

(30.8) (30.8) (30.8) (30.8) (30.8)

(30.8) (30.8) (30.8) (30.8) (30.8)

(30.8) (30.8) (30.8) (30.8) (30.8)

(30.8) (30.8) (30.8) (30.8) (30.8)

(30.8) (30.8) (30.8) (30.8) (30.8)


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Box IPO

Relative Valuation MultiplesEV/Revenue P/FCF EV/EBI

Company Ticker Price MarketCap EV 2014 2015 2014 2014

Athenahealth ATHN $175.50 $7,095 $7,254 9.8x 7.9x NM 54

Bazaarvoice BV $8.49 $653 $596 3.0x 2.6x NM N

Benefitfocus BNFT $56.97 $1,551 $1,473 11.3x 9.0x NM N

BroadSoft BSFT $27.85 $842 $770 3.8x 3.3x 16.7x 15

Concur Technologies CNQR $105.82 $6,352 $6,161 8.5x 6.8x NM 53

Constant Contact CTCT $26.81 $878 $755 2.3x 2.1x 30.8x 15

Cornerstone OnDemand CSOD $56.12 $3,244 $3,154 12.0x 8.6x NM NCvent CVT $40.55 $1,892 $1,734 12.7x 10.1x NA

Dealertrack Technologies TRAK $52.90 $2,978 $3,016 5.4x 4.7x 39.5x 22

Demandware DWRE $73.89 $2,913 $2,637 19.1x 14.2x NM N

E2open EOPN $25.63 $784 $776 3.4x 2.8x 28.8x 11

Fleetmatics Group FLTX $35.57 $1,416 $1,303 5.7x 4.6x 52.0x 20

IntraLinks IL $10.43 $639 $629 2.7x 2.5x 16.5x 15

Jive Software JIVE $9.00 $702 $603 3.4x 2.8x 69.4x N

LifeLock LOCK $19.81 $2,016 $1,843 4.1x 3.5x 32.7x 39

LinkedIn LNKD $196.78 $25,527 $23,203 10.7x 7.8x NM 44

LivePerson LPSN $12.20 $750 $658 3.3x 2.8x NM 29

LogMeIn LOGM $45.33 $1,201 $1,012 5.3x 4.5x 40.0x 29

Marin Software MRIN $10.42 $364 $266 2.8x 2.3x NM N

Marketo MKTO $35.14 $1,645 $1,525 12.1x 9.4x NM N

Medidata Solutions MDSO $62.51 $3,497 $3,486 10.0x 8.7x NM 39

NetSuite N $102.66 $8,288 $8,102 15.2x 11.8x NM N

Proofpoint PFPT $42.56 $1,894 $1,797 10.9x 8.4x NM N

Qualys QLYS $27.43 $1,040 $944 7.4x 6.2x 52.2x 45

Rally Software RALY $18.03 $440 $345 3.7x 3.0x NM N

RealPage RP $18.77 $1,520 $1,487 3.2x 2.8x 21.1x 13

RingCentral RNG $20.60 $1,489 $1,408 7.1x 5.5x NM N

Salesforce CRM $58.16 $37,603 $39,273 7.5x 6.1x 48.1x 43

ServiceNow NOW $66.18 $10,824 $10,604 17.3x 12.0x NM N

SPS Commerce SPSC $64.51 $1,100 $969 7.7x 6.3x NM 64

Textura TXTR $27 10 $733 $658 9 8x 6 5x NM N


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Box IPO Financial Model

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